Medicaid Plans Experience First Decline since 2009 in Administrative
Costs.

October 06, 2016 09:31 AM Eastern Daylight Time

PHILADELPHIA--(BUSINESS WIRE)--In 2015, core administrative expenses (Core expenses exclude Sales and
Marketing) under the control of management of Medicaid plans decreased
at a median rate 5.5% per member, the first time since 2009. Account and
Membership Administration costs increased by 4.9%, the fastest rate
since 2011. These comparisons eliminate the effects of product mix and
universe changes.

Medical and Provider Management costs declined, owing chiefly to
reductions in Medical Management costs. Also, Corporate Services and
Sales and Marketing costs declined. The median core expenses for all
products offered by these plans was $29.06 per member per month (PMPM),
higher than the prior year’s $27.99 PMPM.

We will discuss the results via web conference Monday, October 10, from
2:00 PM to 3:00 PM Eastern Daylight Time. Douglas Sherlock will offer a
brief presentation, followed by questions and answers. To participate in
the web conference, please register at sherlockco.com/webinar.
Once registered, dial-in information and a link to connect will be
provided in a confirmation email. There is no charge for your
participation.

The Navigator analysis excerpts from the 2016 Medicaid plan
edition of the Sherlock Expense Evaluation Report (SEER). This
benchmarking study analyzes in-depth surveys of ten Medicaid focused
plans serving 7.9 million members, of which 4.7 million are Medicaid HMO
or Medicaid CHIP members. Because they have a median membership of
633,000 members, we believe that they are mature plans from a cost
perspective.

A challenging economy and the Affordable Care Act make streamlining
administrative costs a high priority for health plans. An express
purpose of the MLR rule is to “create incentives … to become more
efficient.” SEER provides the initial step in this process by
helping health plans identify and prioritize cost variances.

This is the 19th consecutive year of the Sherlock Benchmarks.
With cumulative experience of 740 health plan years, they are “the gold
standard” of benchmarks used to measure and manage health plan
administrative activities.

Sherlock Company (www.sherlockco.com),
based in North Wales, Pennsylvania, provides informed solutions for
health plan financial management. Since its founding in 1987, Sherlock
Company has been known for its impartiality and technical competence in
service to its clients.